By Shashank Pandey
India recently launched the detailed procedures for the offset mechanism under the Carbon Credit Trading Scheme (CCTS), seeking to operationalise it. The CCTS fundamentally has two components, compliance, and offsets – the former is mandatory, and the latter is voluntary. These procedures govern the latter aspect of the credit market. This framework, drafted by the CCTS administrator, the Bureau of Energy Efficiency (BEE), seeks to align with global climate goals and set a precedent for robust governance in carbon markets. However, its effectiveness will be weighed during its implementation. The procedure has specific, unique characteristics that need to be underlined to understand the trajectory of the prospective voluntary carbon market (VCM) in India.
Incorporating timelines and transparency
The procedural focus on specific timelines for stakeholders in the registration process is pivotal to ensure efficiency and accountability. The procedure elaborates a structured project cycle that begins with pre- and post-account registration on the India Carbon Market (ICM) portal, and progresses through stages like developing the project design document (PDD), and validation, monitoring, and issuing of carbon credit certificates (CCCs). Each stage has specific deadlines and responsibilities assigned to stakeholders like project developers, accredited carbon verification agencies (ACVAs), and BEE itself. For instance, the publication of draft PDDs on the ICM portal invites public scrutiny within 30 days, ensuring projects move forward without unnecessary delays. This timeline-driven approach streamlines administrative processes and builds confidence among participants by minimising bottlenecks. However, one must question whether the timelines are realistic given the complexity of carbon offset projects, particularly in sectors such as forestry or industrial emissions where collection and verification of data can be time-consuming. The procedure also doesn’t specify accountability in case of a breach of timelines, barring a mandated explanation by the respective stakeholder.
Transparency and public participation emerge as defining features of the mechanism. This is in alignment with the global practice where transparency has been a sine qua non for the integrity of the carbon market. By mandating public comments on draft PDDs and requiring third-party validation by ACVAs, the framework ensures that project activities are subjected to rigorous scrutiny. The publication of documents on the ICM portal allows stakeholders, including affected communities, to voice concerns or give feedback. This openness is crucial to build trust in a system where carbon credits must represent real and measurable reductions in greenhouse gas emissions. Yet, transparency alone cannot guarantee fairness; it must be complemented by mechanisms to address public feedback meaningfully. For example, how effectively does the administrator incorporate public comments into final project approvals? The answer will determine whether transparency translates into genuine accountability.
Focus on EIA
Integrating environmental impact assessments (EIAs) within the offset mechanism is a welcome development that ensures the participation of the ministry of environment, forest, and climate change (MoEFCC) and limits greenwashing by entities. The mandate has been incorporated as part of environmental integrity. Section D of the procedure explicitly requires developers to identify potential negative impacts and propose mitigation strategies, ensuring that carbon offset projects do not inadvertently harm ecosystems or communities. This dual focus on emissions reduction and ecological sustainability hopes to set the bar high for project design. However, it raises critical questions about enforcement — how rigorously will these assessments be monitored given the increased domain of exempted projects under EIA? Will the CCCs be cancelled if an entity fails to implement mitigation measures? Without strong enforcement mechanisms, the inclusion of EIAs risks becoming a mere check-the-box exercise rather than a substantive safeguard.
Aligning with international mandate
The final agreement on the modalities of Article 6 of the Paris Agreement was reached at COP29. The offset mechanism attempts to align with Article 6 of the Paris Agreement, which governs international cooperation on carbon markets. The procedures adhere to Article 6.4 Supervisory Body guidelines, ensuring that credits generated under this mechanism meet global standards for additionality, permanence, and avoiding double counting. Moreover, by linking offset projects to India’s nationally determined contributions, the mechanism positions itself as a vital tool for achieving national climate targets. The CCCs generated under the CCTS can be traded or transferred internationally if the sector for which CCCs are issued is the same as those notified by the MoEFCC under Article 6.2 of the Paris Agreement. The effectiveness of the operationalisation of domestic VCM with the international market remains to be seen.
Perhaps the most fascinating aspect of the procedure is how the offset mechanism integrates sustainable development goals (SDGs) into its framework. This ensures that carbon offset initiatives deliver benefits beyond emission reductions by improving livelihoods, promoting gender equality, or protecting biodiversity. For example, afforestation projects could simultaneously combat climate change and enhance rural incomes through sustainable forestry practices. However, this integration also demands robust metrics for measuring SDG impacts.
Is the market ready?
While the offset mechanism is undoubtedly ambitious in scope and design, its success hinges on effective implementation. Timelines must be realistic yet stringent enough to prevent delays. Transparency must translate into accountability and EIAs must be rigorously enforced. International commitments like those under Article 6 of the Paris Agreement must be honoured without compromising domestic priorities. SDG contributions must be measured accurately and consistently. These challenges require sustained effort from all stakeholders — government agencies, project developers, third-party validators, and civil society.
The writer is research fellow at Vidhi Centre for Legal Policy.
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